Most companies have some notion of an acquisition ‘funnel’ — that is, a way to conceptualize how you develop relationships with potential customers and eventually convert them into a source of revenue. However, funnel creation often lacks the granularity that leads to insight and true learnings.

Marketing, sales, customer relations: these are the highest levels at which you can look at your revenue engine, but each stage of this three-phase funnel can be broken down into increasingly granular—and increasingly insightful—segments.

What is the best way to conceptualize an acquisition funnel? As a rule, the totality of your segments should catalogue each and every point at which you lose potential leads. Every failure to convert even a single customer has a reason, and each unique reason represents a needed improvement to your sales process.

Let’s solidify what we’re talking about. Consider a telephony-based sales engine with ‘traditional’ marketing channels, e.g. a billboard. Your funnel begins at an absurdly huge stage of potential leads: everyone who could potentially see your billboard. The first and largest falloff point is the subset of people who actually see your billboard. The first metric you can track, then, is the percentage of people who actually see your billboard compared to the overall population. A billboard obviously scores quite low on this metric, whereas a Super Bowl ad would score much higher.

Within the subset of people who see your billboard, the next segment of your funnel are those that interact with your billboard by calling the number provided. (For simplicity’s sake, let’s ignore the notion of ‘branding’ and assume the success of your billboard depends on what percent call.) Everyone who sees your billboard but doesn’t call is another stage of falloff, so this represents another segment of your funnel.

Among people who call, do they call when you are open? Do you answer the call? Do you have a conversation with the targeted lead? Each of these questions represent yet another segment. You get the picture.

Demarcating your funnel in such a way is not an intellectual exercise. The granularity of your perception generates valuable insights. A marketing channel that seems to generate many leads may nonetheless not generate many customers. By knowing where you lose every single potential customer, you can understand why. If you only have high-level understandings, you may throw away a poorly-performing channel as being a waste of money, when it simply needed a small tweak at one particular stage to alter things drastically for the better.

Obviously such perfect understanding may not be possible, but the closer you get to this asymptotic ideal, the better understanding you will have of your lead-generation system. In summary: no lead is ever lost without a reason, and the vast majority of these reasons can be understood, analyzed, and eventually eliminated. You should strive to make your funnel achieve that goal.